Samsung Electro-Mechanics is expected to pursue mid- to long-term earnings growth on the back of expanding production capacity for FC-BGA (flip-chip ball grid array), a high-value semiconductor substrate.

【Expansion Background: High-Value Product Growth + Big Tech's Structural Demand】 Shinhan Investment Securities cited the expansion of high-value products and structural demand growth from big tech customers as the background for Samsung Electro-Mechanics' FC-BGA capacity expansion. Accordingly, the company is analyzed to be proactively securing production capacity in response to future demand growth. In particular, the report noted the possibility that revenue and profit growth in the FC-BGA segment will begin in earnest from 2027 through 2030. As the effects of the capacity expansion are reflected in earnings, FC-BGA's share within the Package Solutions business is also expected to gradually increase.

【Quarterly Revenue Share Could Expand from 60% to 80-90%】 According to the report, FC-BGA is estimated to account for about 60% of the Package Solutions business's quarterly revenue. If the effects of new facilities are added going forward, that share could gradually expand to the 80-90% level.

【High-Spec Substrates Driven by AI and Data Center Demand】 FC-BGA is a high-value semiconductor package substrate that connects high-performance semiconductors to the motherboard. The possibility that demand for high-spec substrates will also increase if demand for AI, data center, and high-performance computing-related semiconductors continues to grow is cited as a factor affecting earnings.

【Key Investment Point: Price Increases and Profitability Improvement】 Shinhan Investment Securities presented expectations for rising prices of high-value substrates and the resulting potential for profitability improvement as Samsung Electro-Mechanics' key investment point. The judgment is that as the share of high-value products expands, there is room for both average selling price (ASP) and profitability to improve together.

Ultimately, Samsung Electro-Mechanics' mid- to long-term earnings trajectory is expected to depend on how quickly the FC-BGA capacity expansion translates into actual revenue growth and profitability improvement. If big tech customer demand and the expansion of high-value product share continue, the Package Solutions business's contribution to growth is also expected to rise.

[This article is based on publicly disclosed corporate materials and securities firm analysis, and does not constitute an investment solicitation or buy/sell recommendation for any specific stock. Securities firms' earnings forecasts and analyses may change depending on market conditions and corporate circumstances, and investment decisions and responsibilities rest with the investor. AI assisted in writing this article.]